The Centre is planning to classify cryptocurrency exchanges as e-commerce platforms and levy a one percent tax collected at source on them under the goods and services tax (GST) regime.
The tax collected at source by such platforms could be set off against investors’ tax liability, according to a Business Standard report. Also, these exchanges may have to get themselves registered under the GST.
The proposed move is aimed at monitoring virtual currency transactions. The report adds that the central government may classify cryptocurrency exchanges into three categories – the platforms that act as a facilitator, the brokerages that allow buying and selling, and the trading platforms that provide an interface for trading.
Meanwhile, the government is also mulling treating the use of blockchain technology as export and gradually bringing down the tax on it.
This comes amid discussions that the Centre is planning to roll out regulations on crypto investments to protect investors instead of banning them. According to speculations, the Securities and Exchange Board of India (Sebi) could be designated as the regulator. The taxation aspects are also being worked upon, according to people familiar with the development.
Recently, an Economic Times report had stated that the government is unlikely to make crypto as currency to settle transactions and make payments. However, cryptocurrency could be held as an asset like shares, gold or bonds.
In the wake of a possible regulatory clampdown of the cryptocurrency sector, crypto exchanges – including WazirX and Bitbns – have decided to abstain from putting out ads.